Q4 2023 Eastside Distilling Inc Earnings Call

Good day and welcome to the Eastside Distilling reports fourth quarter 2023 financial results Conference call.

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I would now like to turn the conference over to Tiffany Milton controller.

Tiffany Milton: Go ahead.

Tiffany Milton: Thank you good morning, everyone and thank you for joining us today to discuss Eastside distilling financial results for the fourth quarter of 2023, I'm Tiffany Milton Besides controller and joining us on today's call to discuss these results is Jeffrey when the company's Chief Executive Officer. Following our remarks, we will open the call to your questions now.

Before we begin with prepared remarks, we submit for the record the following statement.

Tiffany Milton: Certain matters discussed on this conference call by the management of Eastside distilling may be forward looking statements within the meaning of section 27, a of the Securities Act of 1933 of them in that section 21 E of the Securities Exchange Act of 1934 as amended and such forward looking statements are made pursuant to the safe Harbor provision.

Tiffany Milton: And of the private Securities Litigation Reform Act of 1995, the forward looking statements describe future expectations plans results or strategies and are generally preceded by the words, such as may future plan or planned will or should expected anticipates draft eventually or projected.

Tiffany Milton: Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances events or results to differ materially from those projected in the forward looking statements.

Matters involve risks and uncertainties that may cause actual results to differ materially include but are not limited to the company's acceptance and the company's products in the market success in obtaining new customers success in product development ability to execute the business model and strategic plans success in integrating acquired entities and assets.

Tiffany Milton: Our ability to obtain capital ability to continue its going concern and all the risks and related information described from time to time in the company's filings with the Securities and Exchange Commission, including the financial statements and related information pertaining to the company's annual report on the Form 10-K for the year ended December 31 2023.

Speaker Change: Filled with the Securities and Exchange Commission now with that said I'd like to turn the call over to Jeffrey Gwen Jefferies. Please proceed.

Speaker Change: Thanks, Stephanie.

Speaker Change: I'd like to add my welcome and thank you all for joining us for our 2023 year end conference call.

Speaker Change: Here, we are already in April and well into 2024, However, I think it's important to pause.

Speaker Change: Not only look at last year, but also lost two years, reflecting the change and then look for.

This company has gone through a significant transformation.

Speaker Change: When I joined in 2020, it's focus was clearly spirits with a small mobile carrying operation that it picked up in an acquisition a year earlier.

Speaker Change: Today, the company is on a path to be a leading innovator in the exciting consumer beverage packaging space.

Speaker Change: Meanwhile, we've unlocked gossip.

Speaker Change: Wanted a long turnaround in the midst of Covid.

Speaker Change: Raised capital for growth this year completed.

Our balance sheet restructuring.

Speaker Change: Well I'm encouraged by what the team.

I was accomplished over this period, but even more excited about what's ahead.

None: Now let's review.

None: The results for last year by business segment, let's start.

None: With the spirits business.

None: 2022.

None: Substantially reduced our bulk inventories spirits. So two years ago, 2022, primarily selling bourbon and sold over $4 $4 million.

Bill on the tour.

None: In 2022, so Berwyn places at very high levels and begin to reduce inventory take advantage of the market.

None: Last year, we sold a lot lots of Bourbon.

Bulk bore only 800000 and in <unk>.

None: Hindsight, the timing was outstanding.

None: Because we've recently seen Bourbon appliances, specifically bulk spirits values drop through the fall into 2024.

Currently we have 1000 barrels of Bulks goods and again, it's primarily Bourbon, but it ranges ranges in age from four plus years to 17 years.

None: So we don't have much diesel.

None: Given these activities sales isn't a great metric to look at it.

None: Progress in spirits, a better place to consider what we've accomplished as the operating performance line and cash flow.

None: As we said all last year, our goal was to get the spirit.

Part of that was a stretch goal.

None: We would do it even if we had to shrink sales.

None: Unprofitable volume.

None: For two years, we've been moving that way moving away from unprofitable sales and investments in states, where the return on investment is very low in spirits.

None: I am pleased to announce in the fourth quarter.

None: Last year 2023, we had a.

None: Spirits net operating loss of only $114000, that's a 78% improvement from the prior year's loss of $433000.

None: And this is before.

None: Took an impairment charge, which we call out in financials.

None: Two are running down a small portion of the value.

About tequila business.

None: We're getting closer to breakeven on a cash basis in this segment and we expect to make more progress.

None: In 2024 on the school.

None: Now looking at spirit in the first quarter through February nine liter shipments is tracking flat to last year.

None: On a on a overall basis however.

None: Our Portland based brands were up significantly.

None: Oh, the Portland baselines are up as much as 50%.

None: They're offset obviously by lowest sales outside of Portland and.

Northwest.

None: Gross revenues are lower in the first quarter through February due to the higher proportion of lower priced spirits compared to last year. So we're selling more like us.

None: We ought to cure, however, I will caution you from drawing assumptions on a couple of months the longer term term is really what's important.

None: As orders come slide from month to month and also it's important to note that our shipments is distinctly different from retail sell through.

None: Now with that said, let's turn and talk about the other businesses if I understood your answer which is our craft.

None: Our services business.

None: Specifically, our crop is a premium business had an outstanding year in 2023 planning a total of $14 1 million cans.

<unk> more than the 4.8 million cans of printed in the prior year.

None: Throughout 2023, we improved our processes and win new customers.

None: As we build up a production schedules each month, we saw margins improve and.

None: And we expect to see a substantial operating improvement this year with crowds.

None: We are pre announcing and volumes for the first quarter of 2024, and I expect to put over 4.7 million cans.

None: In the first quarter.

None: That's an 88% increase over the first quarter of last year.

None: We are achieving this through improved processes.

None: Higher throughput and an expanded schedule.

None: Now the other driver here is new customers.

None: Last year, we converted most all of our existing mobile customers to digital printing and we began to make inroads winning back former more mobile customers that have moved to purchase Phil and decorate their own plans with shrink sleeves or labels.

None: Ah recently.

None: We have one much larger customers all over the west coast. Many of these customers are launching new skus converting away from non recyclable labels and others just want incredible flexibility.

None: And graphics.

None: Digital Cam printing offers.

None: Every can we pumped.

None: As our logo on it.

None: And those cans are going places.

None: Recent wins include a beer can serve that the Dodgers stadium.

A large consumer product companies launching new products regional RTP brands RTD brands now these products couple of beer waters.

None: And spikes cell source.

<unk> sensors.

None: Having said this I think there are other reasons why we are seeing customers handover, a critical component of their supply chain to us.

So that has everything to do with the consumer.

None: The consumer has changed.

None: And marketing and consumer beverage is changes.

None: Packaging has.

None: Never been more important.

None: Driven by the fact that to be successful in this rapidly changing space you have to invest in marketing where your products based on the customer.

None: Historically, you could get away with a cheap plastic Ralph cans or <unk>.

None: Larger customers can get away with 19th century printing technology. The only uses a couple of colors on the cans. So today brands that are winning are doing that with creative marketing on their fans.

None: Marketing, the draws and consumers and build brand equity quickly.

None: I'll do the research yourself.

None: Walk the bear island studied the cold kits in your local supermarket.

None: Ask yourself who's positioned here.

None: As in there.

None: And you'll see extraordinary packaging.

None: But most of it is.

None: Recyclable.

None: Digital printing is coming.

None: We've seen customers change their product stuff to use digital printing to expand offerings seasonal skus social releases.

None: Back to you and design strategies have been unleash with digital packaging.

None: We have seen new customers build entire marketing platforms off the package itself a completely new business model.

None: These changes are the paradigm shift that had been referring to over the last year. This happening before our eyes in the beverage space.

None: Digital printing is making this happen.

None: Yes.

None: And one last comment here is I think it's important for us to say and this is what I believe Kraft is the best outage. We are the best digital printer and North America property wouldn't customers that can.

None: The difference in execution customer service and quality so without.

For me to state emphatically I think we're off to a fabulous start for 2024.

None: Now beyond the operational results for spirits and craft, we had a number of other changes that happened last year, including balance sheet changes, we lowered outstanding debt.

None: And it's important to note that we currently in discussions with key lenders to extend issues payments maturity games and increase liquidity.

None: We're not there yet and we're still working on it and we have progress to make there.

We also are working on remain NASDAQ compliance.

None: That has been a challenge and will continue to be a challenge.

None: Now with that said I'm going to save some time for questions and turn the call back over to Tiffany with me.

Thank you Jeffrey and thank you all again for joining our call today, Let's review the fourth quarter on a consolidated basis. Our gross sales were $2 1 million for the fourth quarter of 23, and $2 4 million for Q4, 'twenty, two primarily due to seasonality and printing lower mobile Canning and spirits sales craft sales were $1 2 million.

None: For about 23, and 22, even though we continue to improve our printed can production.

None: Spirits sales were 900000 for 23 and $1 1 million for 'twenty two our consolidated gross profit was flat at negative 100000 for both Q4, 'twenty three and 2022.

None: Our consolidated gross margins were negative 6% for both 'twenty, three and 'twenty to craft market and had margins of negative 26% for 2023 and negative 23% for 2022 spirits margins for 21% for 'twenty, three and 13% for 2022.

None: Adjusted EBITDA was negative $1 3 million for 'twenty, three and negative $1 6 million for 2022, primarily due to decreased operating expenses and.

None: In addition, we recorded an impairment loss with two hours Junior brand a 400000 for 2023 and $7 5 million for 2022.

None: Craft printing operations continued to improve and are expected to deliver positive EBITDA in the upcoming quarters. We continued to gain momentum in the printing sales and increasing capacity and exploring avenues to streamline.

None: Operating cost, we expect continual improvement throughout the year, we will now open the floor for questions operator.

None: We will now begin the question and answer session.

None: To ask a question you May Press Star then one on your Touchtone phone.

None: If you were using a speakerphone please pick up your handset before pressing the keys.

None: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

None: At this time, we will pause momentarily to assemble our roster.

None: The first question today comes from Jay Hooper, a private Investor. Please go ahead.

Jay Hooper: Hey, Jay how are you how's that.

Jay Hooper: Good good how are you good good.

Jay Hooper: Got a couple of questions.

Jay Hooper: On the asset money what was the average sale price is 300.

Jay Hooper: <unk> thousand.

Jay Hooper: Sold.

Jay Hooper:

None: That's a good question I don't know if I have that here in front of me I'll ask Tiffany.

Tiffany Milton: Our controllers online as you can.

Tiffany Milton: It looked that up if not we can.

Tiffany Milton: I'm happy to take a call later and we can give you that number.

None: Sure no worries.

None: What is your canning capacity.

None: And basically what percent of capacity or Europe.

None: Alright, that's great question so.

None: Just to be clear we.

We do Cannae right, we do Phil for people in Portland, We still have a mobile operation there. Although that's one of the things that affected the fourth quarter as we've been reducing our exposure beyond poorly Portland in mobile.

None: Our focus is in digital printing so when you refer to Cana I'm, assuming you're referring to the digital printing batch the decoration.

None: Aluminum cans that are going all over the west now and just to clarify that.

None: The new technology that I'm, referring to when we did.

None: Digitally Prince you know we can do.

None: Photo realistic graphics too crazy different.

None: A different label types.

None: We can do one we can do a $1 billion, we can do a lot of flexibility there.

In that capacity.

None: Right now has a capacity of one machine. So we have one central costs due to 40.

None: And we we do expect that we're going to get a second machine this year.

None: And that will double our installed capacity in Portland and the.

The capacity of that machine depends on how many can you run through how what kind of Oh graphics.

None: You're you're printing how many changeovers you have so with the second machine or throughput will simply increased because of the fewer changeovers.

None: And we will grow so I would suggest that you just think in your head that you know what.

None: Machines 25 million cans, a year or two machines is 50 million cans, a year or so on and so forth.

None: Okay, great. So so if you're running if you're expecting to do $4 7 million.

Billion cans that leaves.

So huge plenty of room.

None: Yes, yes.

None: We're not in a what's what's impressive about Jay about the first quarter's coming out of your December quarter, where there's just not as much production and beverage right. A lot of people have already kind of produce what they need for the fourth quarter and people are on.

None: Vacations in and.

None: Out of the office so.

None: The production side, the filling side of it is not.

None: At full steam yet and so we're coming out of the for the fourth quarter and in the first quarter we.

None: Printed are a tremendous number of cans. So our challenge over the next two quarters is gonna be.

None: <unk> printing full and yeah, we will hit capacity at some point here.

None: And in the next two quarters and managing that until we can get our our next machine online.

None: Okay and also how about the mobile Canning what what.

None: What percentage capacity.

None: Yeah.

None: That's up for more of a flexible because we have a lot of excess equipment.

None: So mobile Canning.

None: As just described that actually you can credit craft with the Genesis of this business I would say it.

None: It goes way back but.

None: The team there has protected the yard.

None: Getting mobile equipment on on a on a mobile platform of trucks and being able to go to numerous customers all over the Pacific northwest.

None: And I feel for them, so our flexibility there or the capacity is constrained by people right. It's a technical job it really requires someone who understands.

What our customers need not every product goes into canvas same way some you know product need certain.

None: Condition, and so oftentimes, we almost like a consultant.

None: New beverages want us to help get that product Mccann, but they've never been and again before so.

None: It's not an easy.

None: Roll until so we have a long training program.

None: At craft, so that the business is gated by.

None: But people. So if you asked me today, what that number is I wouldn't be able to tell you right off the bat, but.

None: There's a lot of capacity still left what's on tap here given our current staffing of our equipment.

None: So I'm not holding you to this but what are you running that.

None: 30%.

None: Yeah, I would say, where we know we're north of that on the mobile side, we're north of 50%, but theres plenty of excess capacity we could.

None: Probably I'd add some as we get into the peak season.

None: Okay. So now.

Kind of a thought.

None: Why wouldn't you take your your current brands such as <unk>.

None: Engineer Portland potato brand.

None: Create a hard seltzer.

Right.

None: And yeah, that's the section.

None: Yes.

That was the genius of the initial management team and I was one of the reasons why crosses acquired was they were gonna be a forerunner in the RTD space.

None: The challenge Jerry I think is the.

None: What the company states for the last number of years, which is theres just so many opportunities right. There is opportunities for us to grow our spirits business selectively outside of the Pacific Northwest those opportunities now in tequila, because the killer margins and improve theres opportunities for us as you said to go into the RTD.

None: Space.

None: But the company just doesn't have the capital right to feed all of these opportunities now our T D.

None: As a high working capital space, So just thinking about that.

None: Concept for a second when you when.

None: When you go into the grocery store and you buy a hard seltzer the price points there are lower than their historically, you know you would you'd capture and in the spirit of bottle of spirits right, particularly in the case of Oregon, which has a control stake.

None: So.

None: We really have to be careful about.

None: Putting the company in new directions, Theyre, just consume more capital more working capital more complexity.

None: Now having said that we.

None: We have customers that are launching products constantly.

None: And so the concept, but I would just go back to and point you choose.

None: A number of years ago, when I was on your side of the table dry docks and one of the.

None: The company that the.

None: The amazing needs through history is Levi Strauss Levi Strauss.

None: Today has gone through a lot of transformation, but its legacy.

None: And the discipline staying focused on just serving.

None: A booming market, which was you know genes that are.

None: In the 19th century when people are all running for the hills in San Francisco for gold.

None: It turned out to be.

None: Such a strategic important move and it was the legacy of the company was built on so I would argue that right. Now if you were to look across our landscape, we have a business in craft and digital printing, it's got a huge moat.

None: I mean, it's it's.

None: <unk> competitive barriers to entry you can't go in and.

None: And find it Ah.

None: Can this digitally printed just anywhere I mean, theres a handful of people to do it.

None: Basically now we only have one technology that can do it.

None: Right, which is the Mahindra cost technology and those have been kind of sold into a different market. So if you want a digital print you're going to Kim works down and you know in Texas. If you want to do it on the on the East Coast Uganda, You know harvest if you want to do at St. Louis.

None: As you can if you want to do it in the Pacific Northwest.

None: This place to get product up into given the shipping lines you'd have to work with us.

None: Otherwise you're going to use plastic heated labels around a candidate eventually.

None: The particularly the people in the Pacific Northwest Theyre, not going to put up with the you know the fact that they're not sizable and they're basically going to landfills.

None: You know I think the bat business this business.

You know if it's clear and you can probably see it over the over the last year. So it's been the focus of the company to get the scale.

None: And becomes such a critical component of our customer supply chain, we can let others go Greg our TV and we're gonna be the guys that are you know.

None: They're officially.

None: Supporting them.

None: Helping them build their product line in fact, I think we're seeing some outstanding new brands and we're not the one has to bet on one concept, where basically you know have multiple.

None: Opportunity to see them explode and they won't be able to go to.

None: Yeah.

None: The crown to have that there can't be made because they're made.

Locally uniquely they're collectible, there's a handful of them and they're gone right.

None: Okay. So so it's not as simple as Oh, we have the.

Yeah.

None: Yeah.

None: Portland potato vodka, we have mccann or we have to do is add to sell so youre, saying that.

None: Yes.

None: Toward filters are so low.

They do a tremendous amount of volume of yeah, you'd have to do you'd have to do a two minute massive volume in an interview really small margins and one of the things on the operation side.

None: Is critical.

None: And we learned this in spirit did you have to be focused you and your first question speaks to this you can't run.

None: Plants with low capacity utilization does not cost competitive right.

None: Did that like you know, we're not you know.

None: Years ago, when we were working with Redneck Riviera that brand we.

We basically bought.

None:

None: With me all the way to the Pacific Northwest, we bottled it when we ship it back east and we were not in a cost competitive position for where the price point was for this.

None: So that brand so.

None: You look at our balance sheet, you can see the impact that had on the company that does a tremendous whole loss value. So right now we're laser focused on them with that.

None: We're laser and episodic where it got too expensive because you were.

None: Shipping.

None: Yeah right.

Think about this.

None: If you were to walk into our golf facility today, and he will walk in and sit down with the team.

None: Bill.

None: Kilborne others.

None:

None: He was involved with our and you were to just sit there and.

None: Stare at the sample cans that this team has it covers a wall.

None: Think about it hundreds of brands.

None: So you're asking why don't we bet on one or two brands a week concept and lead rollout.

None: Effectively what that means hundreds of brands some of the most creative and talented people.

None: All over the west coast with new concepts.

None: But coming to market some of them have done astronomically well in the last year watching the volumes of these new brands come to market has been an eye opening experience for me, but to predict which one it is which brands don't work.

None: It is really difficult and that speaks also to the advantage of this technology you know in the past it's been two years protecting the brand and concept.

None: Had one shot with all the money that you dumped into packaging and the supply chain to get it right. Now you know our brand will come to US, we'll build them a product.

None: They'll go out realize it's not exactly you know resonating and then Theres a change and we're getting a new new version right. So I liked this segment I think this is one where we can win.

None: We're not gonna have to fight.

None: All the way down to every little penny to compete to win market share this would be a successful.

None: Hum.

None: Segment, that's going to have some longevity with margin.

None: So.

None: Over the next couple of quarters, what kind of growth do you see in the digital printing there.

None: It's like I said, we reported that we're substantially.

None: Above what we did last year and we will do it and I think we will have had some success in some corner all frankly, I mean, our biggest risk Jay is working capitals.

None: This company is consuming working capital, particularly cans.

None: I would have ever greater rate right. So as we grow so dramatically.

None: And bring in hands, we have to be able to generate cash.

And.

None: And grow that investment in working capital and so we still have I guess, you said 1000 barrels of Bourbon.

None: Right and a lot of the Bourbon is perfect. We don't we can't actually use its over age for our for our products that like.

None: We don't have a product that takes 17 suburban.

So one challenge that we have.

None: <unk> is too.

None: Redeploy assets, where we can.

None: Right raise liquidity, where we can to industrial and capital. So to your question on the second quarter. The biggest risks that I see is not having the cash to keep the growth at this clip right.

None: <unk> slowed down because of.

None: Our inability to get the cans quickly enough.

And where do you see breakeven what how many cans quarter.

None: Yes.

None: That's a that's out of the good questions. Yeah. So when I think about breakeven it's a function of what our cash costs are what are the margin is on the cans, which I'm not going to go into a much on on on can margin, but the other aspect of it is scrapped.

And managing the process. So if you think about it when you.

None: Doing.

No.

None: You know one of the like.

None: The concepts that you have to think about it as you move a lot of cans through this machine you can hold the aluminum can and they're very fragile and feeling kind of squishing your hands.

None: Yeah, particularly when they're empty.

None: So we have to manage our scrap.

Down to a very low level, we have put in place processes. The team has done a great job last year.

None: And putting in processes to minimize the scrap into the machine and then we have to minimize the scrap out which is making sure the Kansas come out are perfect.

None: A really high call it really high threshold for perfection, there low tolerance for any mistakes on the cans. So we manage that process lower and the scrap comes down so when I think about breakeven.

None: We based on the production that we had this quarter.

None: In the first quarter, the company should be close to breakeven but.

None: EBITDA, that's not generating cash or there might be.

None: More oh.

None: Issues like scrap and stuff that pull is negative but by the time, we get into the mill somewhere at the volumes that we're expecting assuming we have the cans to get through that peak capacity.

None: He is generating a lot of cash in the form of EBITDA and I should also mention.

None: The other operating business spirits.

None: It really close I mean in the fourth quarter. It generated I mean, we we talk about the the EBITDA, but sometimes our EBITDA calculation as you add back all the noncash items in the income statement.

None:

None: And that business also was was close to.

None: To break even and I mentioned, the operating number but if you look at the EBITDA number and the <unk>.

None: Fourth quarter spirits over the last $75000 of EBITDA.

None: The free cash flow and spirit is a lower number because we're not rebuy and Bourbon.

So.

None: So that number is even lower if you add back.

None: The fact, we're not repurchase in Bourbon so.

None: The two businesses are on course to get to that point, where they're generating cash.

None: And then the question is do we have enough cash to support.

None: The cost of being a public company and the interest cost of the.

None: What's left on after the debt exchange.

None: Okay.

None: Question I have taken a lot of your time I'm sorry, but.

None: Now you shouldn't the direction of the company.

None: How is the board.

None: Could you shift.

None: To get some.

None: Outside knowledge.

None: Right right.

None: So we've had thought of yet.

None: I got a little bit of your question you broke up there are your questions.

How's the board supporting this transition of the company and the board need more resources to kind of help us in the direction that we're heading those are great questions and I'll say that I have to say that we've been blessed with a really talented group of people that have shepherd this company to really difficult period.

None: I mean lose loving the borrower's, an example of someone who came on so quickly.

None: <unk> really gave to help us push the company in a good direction and then just because of the amount of time. It took them about constraints that she has a hard time wasn't able to continue with the chairman, but I think youre right I think we need to continue to bring in some talented people who understand manufacturing.

None: I understand marketing and marketing platforms like this that we're looking at who can who can really.

None: To drive the company and we've already actually done that Jay inside the company.

None: We added a CEO of crops. He started in January.

None: Gentlemen, biomechanical tenure he comes to us with extensive background in manufacturing.

None: Having worked with very large.

None: Consulting firm that.

None: Consults with some of the largest manufacturers high tech manufacturers.

None: In North America and in just in the first quarter he's had.

None: Tremendous impact on the efficiency of the company. So I think youre right, we need to bring more resources then.

None: To support this kind of growth and as I said, if we double capacity with more machines and maybe even in other locations eventually.

We'll need that expertise.

None: Just just a follow up.

You're talking about adding a machine that's going to be.

None: Are you going to get the funds for that support.

None: Oh.

None: Through growth or are you gonna have to go.

None: Yeah.

None: We've.

None: We've been working on a financing package that will what do you think is it will take care of it some form of an operating lease.

None: Okay.

Again, thank you.

None: Yeah, absolutely thanks to strip all the time.

As a reminder, if you have a question. Please press Star then one to enter the question queue.

None: The next question comes from Matthew Campbell with <unk> capital. Please go ahead.

Matthew Campbell: Hey, Jeff I'll be quick here.

Matthew Campbell: Good morning, guys who've done a lot of restructuring work in it.

Matthew Campbell: It's apparent that the business is stronger today than it's ever been but you know you. When you look at the income statement you see.

Matthew Campbell: The numbers the way they are at it tells a different story. So she's really quick tequila. The spirits business has been not growing but tequila has been a big weight.

Matthew Campbell: That acquisition done two or three years ago, a big weight on the business.

Have we seen a bottoming of the spirits side I know you said put towards our Portland potato vodka is really starting to grow in your markets now that you're focused on.

Matthew Campbell: I'd like to just get a better handle of that and the loss that you reported acute Q4 are you starting to see it get closer to breakeven on the spirit side.

None: Yeah like I was saying thanks, Matt for those questions like I said on the spirit side.

None: I mean last year I was actually I was optimistic that we were going to be able to.

None: <unk> actually had EBITDA, maybe in the fourth quarter that was a kind of my own personal stretch goal of seeing that happen and you know our adjusted EBITDA for the fourth quarter expense was 70 $75000 loss.

None: Now to your question a lot of things are working in spirits.

None: We've got Portland, potato vodka down to them.

None: To a price point, where it moves it moves well, we still need to lower some of our overhead costs.

None: That expand expanding that margin what will help pushes closer to them to the EBITDA number that I'm talking about because Boston is such a big piece of our business.

None: You know the the burn side is not really grown because we just don't have the money to invest in marketing with that product right now and then the last piece.

None: Piece that you referred to as Youre right the Tequila acquisition.

None: Really it was a hard go since we acquired it.

None: We didn't have the capital to <unk>.

None: Continue to push and grow volume at such a razor thin margins were you know a guy who was at peak price points, but agave has come down dramatically.

None: And so we moved our price points and to heal up dramatically to try to rightsize that business and with that Aileen.

None: Alienated obviously a lot of disc.

None: Distribution, because they were seeing volumes come down.

Distribution and spirits, even a different game than we are they're not motivated the same way. We are that's a huge challenge for any spirits.

None: And unless you are a major <unk>.

None: So you know that's been one of the the hard thing that we have stuck with us.

None: Not going to sell spirits, we're not going to incentivize distribution.

None: For us to lose money.

None: That has not been.

None: Well received by them and in some markets they've backed off of.

None: Pushing our brand right and I think that's that's fair to say, but.

None: You know at this point with the margins, but we now have appeal, particularly with the Gaba at the prices that is now this brand makes money and it could be on course to be one of the more profitable brands when they are not.

None: So I think the thing that I would say in spirits.

It is staying disciplined and.

None: And not letting it.

None: Side of the house consume so much capital that you know that.

None: That we can't.

None: See this you know until people see you'll see the growth opportunity. That's in this company we have to be on a you know.

None: On a lot of capital by it you know we got there.

None: When you look at the stock price and we look at it together and you know we've got two businesses that I think are outstanding and I think that the.

None: The digital campaign businesses.

None: Nice and its people wake up to what's happening in the marketplace.

None: Is gonna be a very valuable business and I also think that spirit, our spirits business, particularly.

None: Comparable scripts.

None: It proved to be a lot more value we attempted to sell.

None: One.

One or more brands over a year ago and there was I think we're lucky because of where we are on profitability right. So what's let's see where we go from here.

None: Okay. Thank you and then on mobile Canning is that business.

None: In your view has that hit a low or or is that still going to be a headwind. When we look at you know the canning side of the business.

None: Yeah, Yeah. So we.

None: So it feels like every corner.

The company had.

None: <unk>.

None: Mobile Canning Ah was coming through Covid and then have the.

None: Structural problem, because some of the customers start to in source their own production capability.

None: Yeah.

There's a number of challenges in inflation in their labor inflation, while others, there's challenges across the board we've talked about them already in spirit. So what we've done in mobile is to pull back from places, where we know that we are getting the return on capital that we're looking for Seattle was one <unk>.

<unk> was another of Portland, we have such a strong embedded customer base. There. It's a place where we learn about our customers. It's I think it's instrumental there'd be an aircraft from Alberta for now.

None: Profitable.

None: Segment of the company, it's going to continue to to contribute cash and I don't know.

None: I think that's an important part of who Kraft days, so in the fourth quarter and last year, we had some.

None: No costs associated with closing you know elements of that business and we still have some lingering costs like leases here or there that we have to work out of.

None: But once that's cleaned up you know when we when we get ourselves organized tour.

None: And with that I don't foresee it as a headwind.

None: Going forward, the bigger opportunity, Matt as we've talked about it.

None: Is getting the second printer online because the important thing that people have to understand about.

None: About digital printing is one machine is carrying the weight of that whole facility.

None: You know.

None: Operating labor overhead finance function, so on and so forth and when you add the second machine.

None: Every dollar.

None: Of revenue.

None: Added by that second machine.

None: Leverage is leveraging all of that fixed cost and so the profitability of machine to is twice that of machine one.

So that's a really.

None: Significance step it's critical for the company to make to really show people how profitable.

None: The things can be and.

None: And when do you think you'll get that second printers.

None: And as you know.

None: Top of the priority.

None: And enough cans to go to the machine.

None: And for working capital in Q2, so we're working on it.

None: Everybody wants these machines now obviously because they are they're seeing it happen I mean P. G as printing or you know with digital frame Budweiser did it has been doing it you know it's kind of flown under the radar screen.

None: But as some of these small brands start to eat.

None: Other people lunch, everybody seems to be scrambling and trying to get into the schedule.

None: Thank you good good good work you know one of these days it will be apparent.

None: Start to.

I'll be able to celebrate.

None: Thanks.

None: But the hard work and I appreciate it those are my questions. Thanks, Matt.

None: This concludes our question and answer session I would like to turn the conference back over to Jeffrey Glenn for any closing remarks.

Geoffrey C. Gwin: Yes. Thank you I appreciate it. Thank you everyone for the time today I know, we're again sitting here in April talking about last year, but I think the story here and the progress report is that we're still seeing good growth in this new technology, great adoption and good things ahead, we need to put a few more.

Pieces in place for people to get Super excited about it and see it really frankly on paper I think we're going to do that this year. So please feel free to reach out to us myself and certainly others in the organization and we'd be happy to keep you abreast of our developments and if not if we don't see here from you know between now and the.

And we'll we'll be reporting here shortly on the first quarter soon alright. So thanks.

None: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

None: Yeah.

None: [music].

None: Yeah.

None: [music].